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2009 REVIEW: IT'S ALL GOOD (FOR US)
By Michael Matthews
January 7, 2010 -- In short, 2009 was a better year for guests than for hoteliers. For once it's a buyers market.
Nightly rates went down across the board around the world and there were some unbelievable deals. In my current hometown of Tucson, the Marriott Star Pass Resort was getting $320 a night this time last year. It is more like $89 a night now.
From the lodging industry's perspective, the worst trend of the year was the inordinate number of hotel bankruptcies from one end of the country to the other. Some were for colossal amounts, exceeding a million dollars for every guestroom. The two biggest collapses, The St. Regis Monarch Beach in California and the Fontainebleau in Florida, exceeded that amount per room.
I blame the greedy bankers more than I do the owners and here's why: The Mathematics of Hotel Finance and Profitability 101.
First, you take the cost of developing a property from scratch or buying an existing hotel and divide that number by the number of keys (rooms) that you will be marketing. Let's say you have an acquisition cost of $40 million and you have 200 rooms. That results in a cost per key of $200,000. To make money and assuming a 68 percent occupancy rate, you'll need an average rate (that's the daily revenue divided by the 200 keys) of $200. That's 0.1 percent of your cost per room for 250 nights a year. Get that $200 average rate and you are on your way!
But, if you have debt of $1 million for every key, then you'll need an average rate of $1,000 a night to cover the debt. Oops! There is no way you can make it.
That's why I blame the bankers for the mess. How they could ever lend that kind of money on a hotel is beyond me. A simple call to an honest hotel advisor would have saved them millions. I will admit that in many cases the debt was supposed to be covered by real estate sales, but if that didn't happen--and, most often, it did not--then pop goes the weasel!
Watch this space, but my feeling is that the new multi-million dollar Ritz-Carlton at Dove Mountain in Tucson may be the next mega hotel to go. It's got huge debt and real estate that isn't selling anywhere close to schedule. Marriott owns a hunk of it and will end up with a white elephant and a hotel they don't want. C'est la vie.
On to happier stories. In 2009, I've added two hotels to your bucket list of top places to visit.
The first was La Residence Phou Vao in Luang Prabang, Laos. It's a simple, charming, well-run hotel in an old Colonial residence operated by Orient Express. The hotel has huge, wonderful guestrooms with baths for two and rain showers. There's a nifty bar and superb food served in a dining room overlooking an infinity pool with a jungle and a golden temple in the background. One evening we had a superlative fish (served Provençal style) caught right out of the Mekong that afternoon. The gardens at night are lit by oil lamps hung in the trees and there is an abundance of wild flowers and orchids everywhere.
A great hotel in a great country not yet spoiled by tourism. It was a wonderful experience in a fascinating place where we never saw a shred of animosity towards us ugly Americans. Since we visited La Residence, the French general manger has returned to Paris, but we hope his very able number two, a very attractive and efficient German woman, has taken over. Go there. Have I mentioned our elephant ride, a grand experience?
The second is the Four Seasons Resort Chang Mai in Thailand. Situated about 20 miles out of town--there's a free shuttle--the hotel is set around a working paddy field with water buffalo roaming free. Vast, and I mean vast, rooms. There are patios for sitting, reading or watching the birds. Bathrooms are sybaritic. The pool is superb. Service is beyond comprehension. (Sunglasses cleaning anyone?). The cooking school is a must. It starts at 6.00 a.m. with a visit to the market. Then you learn to cook four simple Thai dishes and (the best part) eat them. We've been plying our dinner guests with Thai food ever since.
What makes the hotel so special, beyond the setting, are the wonderful Thai people with their beautiful and authentic smiles and gratitude that you are there as their guest. We loved it and I tip my hat to the entire Four Seasons Chang Mai team.
The year culminated with a great find in Paris, which is something since it may be the world's most expensive city. We loved, dollar to value, the Hotel Saint Paul on Rue Monsieur le Prince. The usual small Paris rooms are offset by a happy, observant and helpful front desk staff. There is a limited breakfast service, but the nearby bistros will serve you well. The hotel seems to be run by a chat (cat) called Sputnik. (We even received a Christmas card from her/him.) The hotel is in a great location, a short stroll from the Luxemburg Gardens and the Seine. The Saint Paul is a good deal at 10 percent of the price of the George V.
My wife continues to be a guest of La Quinta, without a complaint. Her latest was the new one at the South entrance of Dallas/Fort Worth Airport. Personally, I prefer to stay with Four Seasons, but La Quinta seems to be the flavor of the year in the distaff department.
I hope you'll have a wonderful 2010. Happy travels (the TSA excepted, of course) and thank you for being a reader.
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ABOUT MICHAEL MATTHEWS Michael Matthews has managed and marketed fine hotels around the world for more than 45 years. He spent 14 years in Hong Kong building the legendary Regent International group. He has also worked with St. Regis, Ritz-Carlton and Rosewood hotels. Matthews is currently based in Arizona. He began writing Do Not Disturb in early 2004.
THE FINE PRINT Joe Brancatelli makes this space available to Michael Matthews in the spirit of free speech and to encourage editorial diversity and the wider discussion of important travel issues. All of the opinions and material in this column are the sole property of Matthews. This column may not be reproduced in any form without the express permission of Michael Matthews.
This column is Copyright © 2010 by Michael Matthews. JoeSentMe.com is Copyright © 2010 by Joe Brancatelli. All rights reserved.